Morgan: Acxiom in 2Q Had 'Too Little Business Focus'

by Lance Turner  on Wednesday, Oct. 24, 2007 5:38 pm  

Charles Morgan, above in this file photo, says Acxiom Corp. of Little Rock was too focused on the firm's scuttled plan to sell out and go private and not focused enough on business during the second quarter.

Acxiom Corp. of Little Rock Company Leader Charles Morgan said his company was too focused on the firm's scuttled plan to sell out and go private and not focused enough on business.

Acxiom had "too much transaction and too little business focus," Morgan told investors in a Wednesday conference call about the data services firm's second-quarter earnings report.

The report showed earnings per share of 13 cents on $351 million in revenue, which increased 0.8 percent from $348.3 million during the same quarter last year.

Morgan said Acxiom spent much of the second quarter "operating in an atmosphere of uncertainty" as questions loomed over whether the company's $3 billion plan to sell out and go-private would go through. It did not, and Morgan announced he will retire as company leader after helping find a successor.

Stagnant Revenue

On Wednesday, Morgan said Acxiom saw "sluggish" overall revenue growth, mainly among the firm's top 30 clients. Year over year, revenue growth among those clients was down more than 5 percent, Morgan said. Revenue from Acxiom's top five clients was down $13.5 million in the second quarter, and $26.6 million year to date.

Outside Acxiom's top 30 clients, Morgan said, revenue increased more than 8 percent. Those small clients represent about half of the company's revenue base, he said.

Morgan said he is not satisfied about slow revenue growth among his top 30 clients. He said the firm can sell better and manage costs better.

Acxiom's information technology outsourcing business also saw revenue declines as Acxiom restructured deals with its clients to implement a "capital light" system. Under that system, the client, not Acxiom, bears the cost of computers and other equipment. Morgan said restructuring those contracts lessens revenue but doesn't affect margins.

Meanwhile, outside of its biggest outsourcing clients, Morgan said outsourcing revenue was up about 9 percent in the quarter.

CEO Search

Morgan also noted that Acxiom continues to search for a new CEO, or company leader, and that several qualified candidates have emerged. Morgan is taking part in the search.

Morgan said there is not set timetable to find a new CEO, but that the board would rather do it sooner than later.

"Searches like this, they take varying amounts of time," he said. "You don't want to live in a further period of uncertainty, so there's a lot of interest in moving along as quickly as possible."

Morgan said the board of directors wants to choose a CEO who will then come in lay the groundwork for the company's direction, instead of the board choosing a direction and then finding a CEO to fit its needs.



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